By: Economy Middle east

Gold prices declined on Wednesday but stayed on course for their strongest annual gain in more than 40 years, while other precious metals slid sharply as investors locked in profits following a powerful, record-breaking rally.

In the UAE, gold rates slipped, with 24-carat gold easing AED6.75 to AED518.25 and 22-carat gold retreating AED6.5 to AED479.75. Additionally, 21-carat gold fell AED6.25 to reach AED460, while 18-carat gold edged down AED5.25 to AED394.25.

Meanwhile, 14-carat gold fell AED4.25 to AED307.5.

Globally, spot gold dipped 1.55 percent to $4,303.14 as of 6:20 GMT. Meanwhile, U.S. gold futures for February delivery dipped 1.78 percent to $4,308.20.

Gold prices surge 66 percent in 2025

Gold prices have surged 66 percent in 2025, posting their biggest annual increase since 1979, when prices were propelled by geopolitical upheaval, including the Iranian revolution. Gold’s rally has been fuelled by interest rate cuts and expectations of further easing by the U.S. Federal Reserve, ongoing geopolitical tensions, strong central bank demand and rising exchange-traded fund holdings.

Analysts noted, however, that the recent pullback across precious metals reflects technical pressures as well as thin trading conditions.

“Gold enters 2026 carrying the momentum of a historic multi-year rally—yet what’s interesting is how uncrowded the market still feels. Even after breaking records through 2024 and 2025, gold is often described as ‘overbought’ but almost never ‘over-owned.’ And that difference matters. Institutional positioning still has room to expand, suggesting this rally isn’t running on excessive speculation. It’s running on structural demand that hasn’t peaked yet,” said Farah Mourad, market analyst, IG.

On Wednesday, the U.S. dollar index climbed to a more than one-week high, making dollar-priced bullion costlier for holders of other currencies. Minutes from the Federal Reserve’s December meeting showed policymakers agreed to cut interest rates only after a highly nuanced debate, even as traders continue to price in two further reductions next year.

Lower interest rate environments generally bolster non-yielding assets’ prices such as gold.

Gold’s average 2026 forecast clusters around $4,500-$4,700

“A big part of the 2024-2025 rally was driven by policy—or more accurately, policy uncertainty. The U.S. enters 2026 with elevated government spending, persistent inflation pockets, and real yields that have been drifting lower. Add a softer U.S. dollar into the mix, and you get the same backbone that supported gold through the past two years still firmly intact,” Mourad added.

The 2025 divergence is a clear reminder of gold’s macro sensitivity. As real yields trended down from June to December, gold surged toward fresh highs. This inverse relationship remains one of the biggest drivers heading into 2026.

“Across major banks, the average 2026 forecast clusters around $4,500-$4,700, while the upper band stretches toward $5,000 if macro conditions simply don’t tighten,” she added, noting that gold prices don’t need a crisis to rise in 2026. They simply need the world to behave the way it has been.

Silver prices

Silver surges more than 150 percent this year

As gold prices declined, spot silver slid 8.77 percent to $71.07 an ounce on Wednesday after touching a record high of $83.62 earlier in the week. Despite the pullback, silver has surged more than 150 percent year-to-date, far outpacing gold, and is on track for its strongest year on record.

The metal cleared multiple milestones in 2025, underpinned by its designation as a critical U.S. mineral, tight supply, low inventories and rising industrial and investment demand.

“Silver hasn’t just outperformed gold—it has rewritten the narrative after almost a decade of lagging,” said Mourad.

“And honestly, the shift didn’t come out of nowhere. 2025 was the year the market changed character. If you look at the cumulative performance, silver suddenly stopped behaving like 2022-2024’s choppy, frustrating range and started showing trend strength, higher lows and a steady build in momentum,” she added.

As for forecasts, she added, the average of major banks places silver in the $56-$65 range for 2026. That’s the conservative view. Technical models stretch further—towards $72 and $88, and potentially higher if the gold/silver ratio really compresses.

Other precious metals

Spot platinum dropped 11.22 percent to $1,952.36 an ounce after climbing to an all-time high of $2,478.50 on Monday. It remains up more than 120 percent for the year, marking its best annual performance ever. Meanwhile, palladium fell 5.28 percent to $1,525.19 an ounce but is set to end the year with a 65 percent gain, its strongest in 15 years.